If you’ve ever wondered how a successful corporation can fall completely apart in just a few years, read on. I’ve watched a few of them do this – from the inside.
Here at Lost Art Press we will soon wrap up the second financial quarter of 2022, and our financial sheet shows our revenue is down 21 percent compared to this time in 2021. Why? We haven’t put out as many books this year because we don’t have strict deadlines with our authors.
Do we care that we are down 21 percent? No. Are we freaked? Not at all. Are we taking any action at all? Nope.
Here’s how John and I look at the business. Are we eating? Yes. Are we doing what we want to do every day? Yes. Are the people we work with happy? Yes (they tell us). Are we happy with the books, tools and apparel we are making? Yes. And is this decline something that will right itself during the next five years? Absolutely yes.
However, in the corporate publishing world, here’s how this problem plays out.
First, the publisher (me) is hauled before the suits (Bespokeus corruptus) and given two options: A) Resign or B) Hit your revenue target by the end of the fourth quarter (typically those targets are 20 percent higher than revenue from the previous year).
If I choose B, here is what I have to do:
- Quickly boost revenue by selling inventory to bookstores at a discount. Here’s why that is a deathtrap. In corporate publishing, bookstores are allowed to return unsold inventory within two years for a full refund. So even if I boosted revenue this year (and saved my job), it could all fall apart in two years when bookstores start returning this discounted inventory (a very typical scenario).
- In addition to boosting revenue, I need to cut costs to improve our profit margin. Why? If I don’t hit my revenue target but I do improve the profit margin, I could end up keeping my job because I brought in the same amount of money. How do I do this? The easy way is to slash production costs for books. One-third of our expenses are printing – let’s say that’s $1 million. If I moved printing to Korea, that would cut our printing costs to $500,000, and quality would actually stay the same or improve (Korea has a fantastic printing industry). If things get even worse, I can move printing to China and cut printing costs to $300,000 per year. Here’s the problem: There’s nowhere left to go after that. And you will never be able to afford to print in the U.S. again.
- At my gauntlet session, the suits point out that our “point of sale” revenue is up a shocking 4,219 percent. (This is because we had an open day in the spring and we didn’t have any open days in 2021 because of the pandemic.) “Clearly this is where the growth is,” according to the suits. “Do more of that!” So we open the store every weekend, forcing me and Megan to work more hours and taking us away from making books. But it works! We double the “point of sale” revenue from $6,200 to $12,400 per year! In real terms, this money is meaningless to the total revenue picture.
- [Megan’s Editor’s Note: At _my_ gauntlet session(s), the suits point out that I could stand to lose a staff member. That’s a huge savings! I refuse. A few months later, I’m the one who gets “lost.” Thank goodness. Now I’m found.]
As you can see, this is why I’d always choose A (resign) over B (gut the business). And then I’d start my own business (with a friend) that isn’t about growth. It’s about stability, making objects that are useful and that we are proud of. And it’s about living well.
— Christopher Schwarz
P.S. I’m not trying to get you to buy anything here – we are totally fine (I *wish* I were that clever of a marketer). Is it dumb to tell your readers your revenue is down? Probably. But I don’t care because we aren’t trying to sell the business or impress anyone.
82 thoughts on “I’m Sorry Mr. Schwarz, But You’re a Goner….”
Ah yes. I like to call this the cult of eternal growth. The most wishful of thinking. I’m glad you guys aren’t falling for the trap.
I agree 100%. In my business I make things that I am proud of. It is not the most profitable, but my employees and I enjoy it and I create many happy clients. In the end, that puts a smile on my face.
Sorry to hear sales are down but it’s nice not to have shareholders–other than the two of you (I am assuming, of course)–and bankers at your heals. Based upon my experience, small has its challenges but the benefits far outweigh them.
Thanks for sharing. This explains SO MUCH. And your clarity shows why you’re a writer, and I’m not.
Or, malicious compliance: Gut the business then resign before the end of the quarter. Set up in the nearest park with a cooler of drinks and popcorn, make book on who will jump or be pushed.
Chris, I so enjoy your refreshing, no-BS prose! Your business model and the quality of your books are why I support Lost Art Press. I love what y’all do and really admire you, Megan, and the whole gang. Now I feel like I should belch or something in your honor! 🙂
I really wish more business felt this way. You are spot on. Stability is first with long term slow expansion in the plan without overtaxing staff and resources.
“If more of us valued food and cheer and song above hoarded gold, it would be a merrier world.” — J.R.R. Tolkien
And a merrier world is a worthy goal. 🤗
As always, I appreciate your candor on all topics. Keep doing your good work.
Smart, experienced and a steady hand at the helm. Thank you
Most honest corporate leader I’ve ever seen in print.
Small wonder that you’re neither a Congressman or Wall Street exec!
Keep up the good work. Promise I’ll do my part to drag that revenue line upward.
Step 5. Make a name for yourself. Build more chairs and put them up for silent auction. ( Maloof)
Great piece as always, Chris.
To my mind there are two separate issues in play here.
For any small business owner (and I’ve had my own firm for 27 years), the concept of “profit” encompasses many things: financial, quality of life, delivery of product or service you want to deliver, etc.
For a business you are running for others, the shareholders, profit and their (not your) vision are the drivers. What is so exasperating about situations like Chris describes is the short-sightedness. A business can be run primarily for profit and still make good long-term decisions and still take care of its people. Enlightened self-interest. As opposed to myopic selfishness. Problem is, too many people don’t think long-term and big picture.
I agree with your assessment. As a business, we are definitely in the former camp. Profit is job six (or so).
I love this post and what you’ve created. I probably own half of your books already, and several tools and even a hoodie…and the list keeps growing. It feels good to know that when I buy a book, I’m supporting people trying to make doing what they love work. That happens to be what I love too, which is very convenient.
God bless you for your honesty. It’s so refreshing in this crazy world. Post like this are why I enjoy spending my hard earned money on excellent books made in America. Your products are top of the line and teach more than any others I have ever purchased. Thank you for your dedication to make the best!
Forwarded to my boss 🤣
I admire and appreciate your candor. A couple of thoughts occur to me as I read your post: Woodworking as a hobby may be experiencing a momentary decline in popularity. If woodworking forum participation is a mirror of interest in the hobby (and it may not be), it also is down. Tool makers are mired in supply-chain issues and have suffered losses of skilled workers due to Covid-related staff reductions in their own facilities and those of their suppliers. Woodworking sales and education events have disappeared. Lastly, if my own experience is at all typical, I have done almost no woodworking in the past couple of years, yet I still have a personal interest in it.
What I suspect is wrong is that woodworking is suffering from being a rather solitary activity during a time when more solitude is the last thing that people need more of. Rather than have a store that is seldom open; or as one maker has reportedly done, stop answering incoming phone calls; throw open those doors and embrace those who support you. As the saying goes:”Out of sight is out of mind”.
I don’t see woodworking declining at all. But forums have been declining for quite a while. Just like MySpace.
Many forums in many hobby areas have largely moved to Facebook over the last decade or so. Not an improvement in my book, certainly not for public visibility of information, but that’s the reality of it.
Far out , as we used to mumble
Also, start publishing lawn dart plans for items that are illegal to sell. Then defend the deadly lawn darts in letters to the editor when a reader calls in the Consumer Product Safety Commission. I wish I was making this up.
Bring back JARTs.
Pursuit of quality and long-term stability over recurring (unsustainable) growth at any cost is to be admired and appreciated. Keep fighting the good fight! – Cheers
Wow! This is why I like your blog. I can get wood working info anywhere, but this is priceless.
Over the weekend I read most of The Stick Chair Book, I especially enjoyed page 120, sharing your valuable corners. It’s a wonderful lesson, but requires patience. Sitting on extensive inventory must be stressful. I’m self-employed and often have to swallow my pride and depend on my wife’s steady income (which allows me to spend some time reading).
The production manager at the printing company where I worked, predicted that “books won’t become obsolete, they’ll be of higher quality and more expensive”.
My copy of Graham Blackburn’s Traditional Woodworking Tools has a giant sticker on the cover – $7.99. It was on clearance at a now defunct, discount bookstore. It’s a book that changed my life. I paid full price for the Anarchist’s Tool Chest, which also changed my life. There are at least five other Lost Arts Press books on my shelves, but I have a self-imposed rule – I can’t buy another until I’ve read what I have. I promise to read faster!
Keep doing what you do so well. If Lie-Nielsen sells their name and offshores production – we can all throw in the towel.
Fascinating and succinct article . Don’t fret , when you publish ” The Dutch Tool Chest Book ” sales will rocket . This long teased item will be the best selling book ever at LAP and drive profits to record highs ( maybe ?? , or perhaps I just want the book ) . regards
Corporations typically ignore the laws of physics in setting revenue targets. In their worldview growth is a requirement for success regardless of circumstances. Beating up your employees to make targets is infantile. Wall Street is the greed example of unending growth expectations – the ups and downs in this illogical culture of euphoria and panic is its trademark. Rarely has the stock market defied the reality of worldwide circumstances as it has in the past two years, and there is a price to be paid – and it will be paid in the coin of inequality that is the hallmark of our financial world. Since something cannot be made from nothing, and since there is a finite limit to what is available, the very definition of competition is that when one entity succeeds wildly other entities must fail. Sharing has never been the character of Homo Sapiens.
I always roll my eyes when someone opines “I wish they would run government more like a business.” I hope to God it’s not like any business I ever worked for.
If things ever do get tough, play that ace you’ve been holding: the risqué “Authors of Lost Art Press” calendar.
Re: “run government like a business”. Damn straight, brother!
God please no! last thing anyone needs running through their head is an image of Chris in a tube top!
As cactus Ed said: we live in a country run by the ideology of the cancer cell: growth. Glad there are folks like you cutting a different path.
I have been ignorant,starving, and homeless. At each juncture I have read a Lost Art Book.
My belly is full as I sit by the heater in my studio woodshop.
Nice to know of an island of sanity in a sadly muddled country/economy.
Thanks for sharing. Keep the faith. What you are doing matters! A tiny corner of integrity shining in a large, dark room.
God bless you Mr. Schwarz!
After working ~10 years in a chain bookstore in a previous career, it’s really interesting to see that perspective from an independent publisher instead of the retail end.That explains the huge ‘bargain’ book section, as well as the endless flow of ‘return to publisher’.
Thanks Chris. There was a small owned store I used to purchase items from frequently in the late 2000s. The owner did things differently there. He paid cash on delivery for all items he received. No floating credit bs. He flat out owned everything that was in the store. As such, his motivation to put up with crap from customers, local government, etc was very low. He could close up the shop for the day or for good as he didn’t own money to anyone. It really changed how he conducted business relative to others. The two I follow when it comes to how things should be run is Warren Buffet (index funds for my retirement – the market has great discounts now) and Dave Ramsey (debt very bad). Most of what big business does has there heads up their ass for the reasons you mentioned. I often see degrees in business and finance as a detriment as they are “indoctinerated” in the wrong way to do things. My wife has a list of LAP press books I want and my birthday is coming up. Fingers crossed.
According to my CFO (aka spouse) our purchases of Lost Art Press products is up a gajillion percent this year. (Until recently, I didn’t know LAP was such a great place to invest). 🙂
I am a partner in a company with 20 employees. We could handle a -20% quarter, but not two in a row. If that were to happen we’d have no choice but to let people go. We can’t pay people with promises.
How refreshing! Thank you for your honesty.I appreciate that you have the sense to not source offshore.This is why I trust your products.
Some businesses aren’t meant to survive or thrive. That’s when the private equity guys move in like vultures to pick meat off the bone. They don’t care about leaving the carcass behind. This sort of self-created business destruction is a catalyst for innovation. Would LAP exist without it? Maybe. But the lessons you learned from this experience allowed you to create a more sustainable business and that’s what really matters.
The little bee in “Never Despair Nothing Without Labour” comes to mind. Long live LAP!!
The quality is what keeps people coming back to Lost Art Press. Keep that above all else. Keeping manufacturing in the U.S. is appreciated too! Some will want to say that is in unimportant but it has contributed to less stability in this country. Just the supply chain crisis is one example. Yes it may have still been there with Covid, but recover would be shorter because the chain is shorter.
The main difference I see between you (LAP) and the faceless corporation is your lack of the Bespokeus corruptus. They are a worthless drain of resources providing no material.benefit to the organization.
corporations and businesses thrive on the skill and dedication of the employees not on the arrogance of the narcissistic executives.
The beauty of the small business is that the owner, CEO, and chief bottle washer are all.the same person.
I’ve just ordered one book (Kitchen Think) and it is right good in helping me contemplate redoing my kitchen on my own. Keep the good stuff coming.
Hi Oglester, I’ve just received my order of ‘Kitchen Think’, same reason as you, my kitchen requires redoing, problem is I spend too much time thinking rather than doing, always an issue for me, is that upright corner piece too thick/wide, should I radius, chamfer, of leave sharp, fine details that make or break the design.
You might be getting a little slowdown from folks finding themselves in a situation like mine: I bought the bulk of what I most desperately wanted in ’20 and ’21, and as ’21 inched along, my time became less free to spend on my “fun” things and had to go into more general “life” stuff. I am not selling my tools or giving up on my shop (too well outfitted to do that, and I like being in there), but almost nothing is getting done right now except work on the house, yard, and kids.
I do appreciate your keeping your head. I watched from afar a family business I worked for as a young adult go the “MUST CONQUER THE ENTIRE MARKET!” route–and they lost everything. Granted, they had help down the primrose path to oblivion from shady corps selling them failing stores, but they put themselves in that place. Sad, but “pride goes before a fall,” as they say. :/
I’m sure there are many factors that could help explain the decline in revenue.
I think the biggest factor is a lack of new books. We have had only one new book in 2022, “Cadi and the Cursed Oak,” which also was aimed at building a market for children’s books. Typically we have released three new books by the end of the second quarter.
In any case, we have lots of new books at the printer for the second half of the year.
Hey, if the Dutch tool chest book is one of those, I can guarantee I’ll pony up for at least that one. 🙂
Sounds like you spent some time in a corporate publishing company run by bean counters. Could this be true? 😉
This is what an ethical business model should look like that uses “Service Leadership” modalities in its daily structure…and asks the most important questions a business should ever ask…IF…it is about success at the human and social/ecological level:
“…Are we eating?…Are we doing what we want to do every day?…Are the people we work with happy? …Are we happy with the books, tools and apparel we are making?…And is this decline something that will right itself during the next five years? …”
If all have the affirmative at any given time then the business is a success and on the correct track for future success…
Thanks for being a profit based company with a 501.C3 outlook and sharing these business details with us all…your faithful readers and supporters!!!
Thanks Jay! Much appreciated.
Well, I just order the Woodworker series – thought it would be a good idea to get them while they’re still available. I’m with the other commenter who suggested publishing the Dutch Tool Chest book. I’ve wanted that since I saw it in your “Traditional Tool Chest In 2 Days” video. Speaking of that, why not make a book out of tat one too? I enjoyed watching the video, but I’m more of a book learner, plus it’s helpful to be able to book mark, flip around to different sections, take the book with me when I go camping, etc. Anyway, I love your work. Hope you can stay in business.
The whole world needs to tell Megan to turn over the manuscript to me. It’s done. I’m sure it’s fantastic. I think she just has cold feet.
And we’ll be in business as long as I draw breath. Even if I have to make our books one at a time on a mimeograph machine. This is what we do.
Do it Megan. Do it!
Go for the Gold, Megan! DTC! DTC! DTC! Put the kitties on your cold feet! DTC! DTC! DTC!
I’m currently waiting for the next print run of ‘Sharpen This’ since the first got sold out( just jesting, although the “Sold Out” on the item description is a bit confusing.
The Moxon reprint, Dutch Tool Chest, and Pole Lathe books you mentioned sounded good, although I’m already backed up on other LAP books I’d like to order.
Unfortunately, it’s always confused me whether constant small orders, or occasional larger orders are better for small businesses.
That’s an excellent question. Most mail-order businesses structure their costs so it doesn’t matter. John spends a lot of mental energy tweaking the shipping tables so that works out.
From a personal perspective, big orders use less packaging, less gasoline, less labor and cost less to ship compared to several small orders. So the human cost is lower.
I only have one thing to say “Thank You for being Honest with us”.
This is exactly why I am so glad I found this blog and your website and exactly why I will continue to by your products! Thanks to all!
Don’t bother going to heaven your all ready there ! Being self employed as a chippie in the burbs working out of my troopy
I’m in heaven Too !
In the corporate world you must do “better” every month, every quarter, and every year than you did the previous period. If you do not, you will be “punished” at the orders of the stock analysts with lower stock prices. Since this is impossible, companies take turns making hay and being punished.
Thanks for the fantastic insight Chris! This is exactly why I’m in the process of leaving my high-paying job to start my own business.
As an aside, if you’re looking to increase your sales, I think a multi-DVD set and leather bound book about how to make your own woobies would fly off the shelves. 😂
Well said. For what Lost Art Press is selling, yours is the perfect model.
What I appreciate most about you guys, though, is that I KNOW you could make a ton of money with tool reviews and recommendations and sponsorships and the like, and while that might a quick revenue fix, it would destroy your reputation long term, as it has so many other “influencers” who are just shills, plain and simple, and have no credibility as far as I’m concerned.
You guys have a brand we can trust.
We have been offered free stuff many times to simply show it in our shop in the background. And other times we have been flat out offered pay to play.
It’s not in our genome. We have no problem with people who do it and fully disclose. It’s just not for us.
I own a lumber yard I’ve owned construction companies. I own a production woodworking company. I stepped back I had no balance. The manager runs the lumberyard the woodworking for profit is sitting way in the back of the bus. True I work for someone else now while my empire is managed. Couldn’t ask to work for better people. My old boss was a tyrant (yes I was the boss). The Emperor is on campaign. that reminds me I need to dig out the first book i ever bought by Mr Schwarz. I need a campaign chair. Now when I’m at the yard I do it because I love it as with woodwork. Thank you for all that you do and the inspiration to us to keep going.
Thanks to the both of you!
Well articulated. Keep up the good work and that slightly grating sense of humor which is so adorable. 🙂
Hello, I am among the people who really appreciate the work you (and people connected to LAP) are doing in every field – woodworking, publishing, schooling and last but not least, blogging. You post an article almost every day, some days even more than one. Some are informations/ advertisements on your stock, book exerpts or what are you working on. Quite a number of them are very information loaded on different aspect of woodworking, tips, recipes, techniques, tools. Me, as many your readers are both foreigners who can´t so easily get hands on your books/ other goods and/ or do not have enough free money to spent on them regularly. Although I thing I know your philosophy behind work you do, I have one cheeky proposal: why not to add some kind of donate button (“buy me a coffee” thing) here on your blog? It would be great tool how to materialise our “thank you”. It would be no charity or shame. I think it would not be in opposite of your motto “nothing without labour” either. Work, time and effort and passion for the subject were given to every post you wrote. I know your LAP blog is not just bussines thing but mostly about your passion to woodworking and I´m certain that in your honesty the response will be “no” – but give it a thought. I hope my post make any sense. Pardon my cheekiness, please and sorry for long comment. Thank you for your honest post – it did not surprised me on any level but added to my impression about you greatly.
Thanks. We will give it some thought. I promise.
I’m with Pavlina on that one. The quantity and quality of information I have garnered, supplied for free, on blogs and websites such as yours has been invaluable. It is one of the reasons I have seven of your publications sitting on my bookshelves and will continue to be adding more.
Thanks for posting this explanation. As a business owner myself I frequently wish consumers knew more about what it takes to keep the lights on and how they indirectly influence quality in the market place by their choices. Very happy you started this business. Best of luck to you guys going forward.
Boy did your post bring back bad memories! I hated the last few years of my career because of the constant pressure for more profit with no regard for people or consequences. You have the right attitude. Thanks.
Hi there, Just read your piece on the suits and their influence on businesses, article ‘Mr Schwarz you’re a Goner’, here in England the drive for business growth is ever increasing, we cannot all have an ever increasing piece of the pie, the pie is only so big, this continued need for growth has partly led here to all the hand tools sold in the big box outlets to be sourced from China, these are not of the quality I like, I always buy quality over quantity, but then I can afford to do so, many cannot. Unfortunately I hear this is the case to a certain extent in the US, I have experience of this some time ago when I visited the east coast and purchased some small Jorgensen C clamps which I presume are manufactured in China, not good quality.
You are all doing a fabulous job at LAP and Co, keep it going, by the way, love your workshop, I viewed it on Google earth, gonna build myself one just like it soon when the heat goes away.
I reckon that this article shows that while many a suit will cause many a redundancy and many a firm closure, the LAP will be around for as long as there is somebody who wants to run it in the accustomed manner. It’s a bit like watching a string of blown out race horses being taken off to the knacker’s yard while the sturdy old shire horse just carries on pulling the plough.
When I was in the corporate world, one of my favourite quotes, was:
“Worry about the quality and the money will look after itself. Worry about the money and the quality will not look after itself…”
So keep doing what you are doing. I have one shelf dedicated to your books and there’s still space.
Lost Art Press was a significant factor in encouraging me to take early retirement. The pull to the workbench was too strong to resist.
Thank you Mr Schwarz.
I just purchased the shop apron. Doing my part.
Where do I sign up?!
My all time favorite post (and that’s saying something) is still when you danced on the grave of I mean explained how Lost Art had surpassed yer previous corporate overlord by a common business metric.
So my I humbly suggest that one year ago your revenue was too high and you have taken the appropriate corrective measures. Congratulations! The too-high problem will likely recur. Often.
This is exactly why I signed up for your emails . You Are good very good…
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